The music industry versus Napster - and the future of copyright on the Web

A last minute reprieve has temporarily saved Napster from shutting down following a US court ruling. But what are the future...

A last minute reprieve has temporarily saved Napster from shutting down following a US court ruling. But what are the future implications of the service's battle with the American recording industry?

On Wednesday 26 July 2000, the RIAA was celebrating what it believed to be a massive victory in the battle to keep control of its artist's material. US District Judge, Marilyn Hall Patel, had just ruled that Napster, the MP3 file sharing service, must stop aiding the exchange of music under the copyright of the five major labels the RIAA represents. Napster had until midnight Friday to comply, but the hugely popular service had already acknowledged that it would be impossible to filter out the millions of files effected every day and that the judge's decision had effectively closed it down.

Just over a day later, however, the situation had changed considerably, with events taking place that could make the RIAA consider its position a little more carefully. Napster has now been allowed to continue as it was, until the conclusion of its appeal trial following some last minute legal manoeuvres. Perhaps more ominously for the RIAA was the massive increase in use of copycat services that the ruling caused, as users sought out alternatives to Napster to continue their file sharing activities. With so many services out there, and many almost impossible to legislate against, the problem of protecting an artist's copyright will not go away even if Napster is forced to close.

At one time it was easy for the music industry and artists to keep control of their intellectual property. Records were sold and royalties could be taken from a share in that sale. Radio broadcasts were easy to monitor and royalties were received whenever a certain track was aired. As technology has progressed however, legal questions have been raised as to how to enforce copyright law.

When tape cassettes first appeared there was great concern from artists and music companies over the problems it would cause with piracy. A similar situation occurred when VHS was launched onto the market, enraging the film industry. While a degree of piracy still occurs in these areas, the situation has been kept relatively under control, and both the music and film industry have been able to take advantage of new recording formats. It seems that the music industry was caught rather short with the emergence of MP3 and is now seriously concerned that it may lose all control of its intellectual property.

What started off as a simple compressed audio file type has turned into an Internet phenomenon. MP3 is a reasonably quick and simple way to receive music tracks in electronic format. There is no provision for copyright protection built into the format and, as such, the music industry has very little control over it. Anyone with a CD-ROM drive in their PC, connection to the Web, and MP3 recording and playback software - which is freely available over the Internet - can record an audio track onto their hard drive and send it to anyone they wish. While this is copyright infringement, it is almost impossible to trace the movement of these audio files, which can then be passed onto any number of people with reasonably speedy connection to the Web.

Napster's arrival on the scene has just compounded what was already a very worrying situation. Launched early last year by 19-year old Shawn Fanning, Napster offers the ability for anyone who logs onto the service to open a part of their hard drive to the public in order to share their collection of MP3 files. Anyone else who is logged into the service at the time can then download the files of their choosing, easily found via the software's search facility, directly from the user's PC. Unsurprisingly, the site became hugely popular with music fans, especially those on US University campuses, who wanted to download the music of their favourite bands. With over 20 million registered users around the world, the perceived loss of money to the music industry was potentially enormous.

And so the lawsuits followed, but Napster believed it was protected against copyright infringement by an act that was pushed through by the music industry itself. The Digital Millennium Copyright Act (DMCA) was passed as law in the US two years ago as a means to protect the interests of songwriters, artists and movie directors in the electronic age. But what was originally seen as a forward-thinking move by these industries now seems horrendously out-of-date following the introduction of file-sharing software. While the DMCA gave the courts new powers to enforce copyright protection on the Internet, it also introduced safe harbour provisions. These provisions protected service providers from being liable for copyright infringement if files were being passed between users of the service. It was meant to protect the major ISPs from liability, which could run into billions of dollars.

Napster, however, tried to use this safe harbour provision against the music industry. Napster did not hold any of the MP3 files that were being traded and so claimed it was not responsible for any copyright infringement that took place. In essence, it was a service provider that allows users to share files, even if they happen to be files protected by copyright. Nevertheless, it was obvious that the vast majority of files exchanged over Napster were copyright protected, a figure of around 90 per cent was accepted by the judge and may well have swayed the judgement. Still, Napster believed it had a strong case and several legal precedents in its favour.

It tried using the "Xerox" defence: Xerox is not responsible for anyone illegally using its photocopiers to duplicate copyrighted material, so Napster should not be liable for people using its software to illegally exchange music files. Another precedent set in 1998, when CBS tried to sue Amstrad, saw Amstrad's high-speed tape-to-tape machines cleared of breaking copyright law, even though CBS claimed the machines were only capable of recording and not playback.

One additional argument, although not a legal precedent, that Napster used revolved around VHS. When in its infancy, the film industry pushed for VHS sales to be blocked because of the threat of piracy. The US Supreme Court refused to do so and now VHS sales count for a significant part of the film industry's revenue. As part of this argument, Napster produced a survey from market researchers Jupiter Communications, that claimed to show that Napster users were far more likely to buy CDs after using the service to sample the music. In the end, however, this all came to nothing.

In general, courts have always tended to leave the responsibility of the copyright holder to enforce compliance with copyright law and avoided clamping down hard on new technologies. In the Napster instance, the threat was perceived as so huge that Judge Hall Patel felt she just had to do something.

As such, any tracks whose copyright belonged to Warner Brothers music group, Sony Music, Seagram's Universal Music Group BMG, Bertelsmann AG and EMI, were ordered to be removed from the service within two days of the ruling. Napster claimed this was impossible and would cause the service to close down, resulting in the loss of 40 jobs within days. This did not hold sway with Judge Hall Patel who claimed: "Napster wrote the software, it's up to them to write software that will remove, from users, the ability to copy copyrighted material. They created a monster."

Following the reprieve, Napster hopes that the decision will now be overturned completely in the Court of Appeal. But the RIAA is not the only organisation to challenge Napster. Individual artists such as anarchic thrash metal band turned corporate rock giants, Metallica, and rap star, Dr Dre, have also taken legal action against the company. The Judge's ruling could well turn the balance in favour of the artists whether the decision is overturned or not. By referring to "massive infringement" Judge Hall has blocked a defence based on denying access to users who infringe a particular artist's copyright.

Whether or not RIAA's lawsuit does bring about the eventual downfall of Napster, it is highly unlikely that it will spell an end to the problem of mass copyright infringement over the Internet. Already there are numerous companies offering similar services, all vying to be the next Napster and willing to take the risks associated with it. Among these copycats, however, is a new breed of software that takes the risk out of file swapping, so there is no central point for the industry to attack. This could be far more damaging to the RIAA and impossible to work with.

Gnutella software is designed to perform the same purpose as Napster, but in a slightly different way. The system was introduced on March 14 this year by a group of programmers from AOL, but the threat to intellectual property for all types of electronic data was perceived to be so enormous that its website was torn down within 24 hours of its introduction. By then though, enough users had got hold of the software, which was then posted to other websites and newsgroups and has spread like wildfire ever since.

Gnutella allows computers to connect together in a file-sharing community similar to Napster, but as each user acts as both a server and client, there is no need for a central service that could be liable to court action. Worse still, Gnutella not only allows the transfer of MP3 files but of a whole range of files and software, broadening the piracy threat to a much greater number of industries. The only thing that is likely to slow the uptake of Gnutella is its comparative difficulty to use in relation to Napster.

Gnutella is an open source program constantly being developed by amateur coders and hackers and, as such, can be quite hard to use. Napster however, has prided itself in its ease of use. Nevertheless, when the initial verdict was announced, Gnutella sites around the world were swamped with traffic as users sought alternative file sharing sites.

But it is not just Gnutella that has found itself struggling to cope with demand., a similar service to Napster that also has a case with the RIAA, was forced to shut down temporarily due to excessive demand. Other similar sites, such as Angry Coffee, Gigabeat, Freenet and Napigator, also saw a significant increase in interest.

If Napster wins its appeal, the RIAA is going to have to rethink its strategy towards online music. Even if the appeal is rejected, there are plenty of other services out there willing to take Napster's users on board. Many of these will not be so easy to take down. Recent manoeuvring by Napster has seen it promoting a spirit of co-operation between itself and the RIAA. This could involve a charge for the service or as a promotional tool for artists among other options. So far, the RIAA refuses to look at this option, preferring just to get Napster out of the way, but it may make more sense to take a new approach to the problem.

So far, the music industry has stuck doggedly to its traditional business model while other industries have embraced the opportunity that the Internet provides. A recent UK Government report warned that musicians and songwriters were set to lose millions of pounds in revenue through piracy unless it makes it easier to buy music online. It highlighted the fact that music's most devoted fans were teenagers, yet they could not purchase online until they were 18, and that many adults were still wary of passing credit card details over the Internet. If the music industry is to have success in drawing music fans away from the Web, then it needs to look at new ways to market its online activities and make it much easier to purchase music online.

It may seem unlikely, but the RIAA could work with Napster if it wins the appeal; this could be advantageous to both parties. It could be argued that Napster gets music to users who would never before have thought of purchasing certain artists' recordings. It is also believed that many music enthusiasts don't want to bite the hand that feeds it, and will continue to purchase music whether there is an easy form of piracy or not, just as the survey from Jupiter Communications showed. There are certainly marketing opportunities there that could be explored rather than for the industry just to continue fighting a battle it may never win. If Napster is forced to close, the file-sharing community may move to an area completely out of the RIAA's, and in essence, the law's control. If that happens, the battle against piracy may be lost completely.

Paul Grant

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